Problem-plagued Club at St. Lucie West now on road to recovery

WPTV's Bryan Garner reports on the condo conversion crisis on the Treasure Coast. Scripps Treasure Coast Newspapers reporter Melissa Holsman talks about some of the findings she and fellow reporter Nadia Vanderhoof made while researching this story. For more on this special report, go to http://www.tcpalm.com/condoconversions/.

Charles Chittenden, treasurer and board member of Club at St. Lucie West Homeowners Association, looks over data during the home owners meeting inside the clubhouse Oct. 5.

ERIC HASER eric.hasert@scripps.com

PORT ST. LUCIE — Club at St. Lucie West, an upscale condominium complex that’s racked up 132 foreclosures since converting from apartments five years ago, had lax security, unruly renters and many absent owners who refused to pay the bills.

But now the 8-year-old Mediterranean-styled community with 380 units off St. Lucie West Boulevard could serve as an example of how a converted condominium complex mired in debt, owner apathy and neglect, can put itself on a path to financial recovery.

“We don’t have a lot of traffic running in and out without controlling it.”

Construction had barely finished at the Club when Hallendale-based Sunvest Communities purchased the rental complex for $51.4 million, the second largest sale on record in St. Lucie County, according to property appraiser officials.

Condos priced in 2005 for $150,000 to $300,000 have lost about two-thirds of their value, selling now for between $47,000 and $88,000, records show.

Chittenden, a retired insurance executive from Vero Beach, said despite the Club recording 174 liens against owners behind on maintenance dues, he and his wife Judith saw a solid investment opportunity last year when they purchased three units they now rent out.

Especially, he said, since board members in the past year regained control of the complex by installing tighter security and enacting stricter rules.

“A friend of mine bought 40 units in there to buy the developer out and he was telling me about it,” Chittenden said. “We were impressed with how clean it was. It didn’t look like it was run down.”

For years, there was no money to operate security gates, he said, and a mostly inactive board of directors had no say over who moved in and out. Renters now undergo a criminal background check before moving in.

“It’s all pretty tight on making sure we get the right quality of people in there,” Chittenden said.

Realtor Rodger “Skip” Breese, of Hoyt C. Murphy Realtors, in Port St. Lucie, who has sold several condos at the Club, described it as an “excellent” community.

A rising number of recorded short sales prove the Club is attracting new buyers, he said,

And it could be some time before they do, said W.D. “Chic” Acosta, executive vice president for mortgage banking at Seacoast National Bank.

Converted condo projects plagued by foreclosures are “bad for owners, and very bad for lenders,” Acosta said.

“Until the ownership has transitioned to some form of owner-occupancy ... we really don’t want to play,” he said, “because we don’t know what’s going to happen, we don’t know what the people’s interests are, and we don’t want to make investor loans in this market to begin with.”

In determining when it’s time to begin lending again, Acosta said lenders will look for the kind of improvements the Club has been taking to financially stabilize itself.

Bankers first will want to know the percentage of rentals, whether foreclosures are ebbing down, and who is running the complex.

“Has the association taken control of the project?” Acosta asked, “and are they making decisions that will insure the long-term viability of the project?”

For Chittenden, the answer is “yes.”

“Prices are way down, so we have more units that are owner-occupied and fewer investors, and that makes a difference,” he said, “because now everybody is making their monthly payments and we’re operating in the black.”

He’s not done investing either.

“We’re looking for another six or seven down there,” Chittenden said. “We’re going to buy more as soon as they become available.”